Rivas v. Comm'r

T.C. Memo. 2012-20

UNITED STATES TAX COURT

IVAN RIVAS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 5448-08L. Filed January 18, 2012.

Ivan Rivas, pro se.

Frederick C. Mutter, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

MARVEL, Judge: Pursuant to section 6330(d),1 petitioner

seeks review of respondent’s determination to proceed by levy

with the collection of petitioner’s unpaid 1999-2003 Federal

income tax liabilities. The issues for decision are: (1)

1
All section references are to the Internal Revenue Code, as
amended.
 - 2 -

Whether petitioner is precluded from contesting his underlying

tax liabilities for 1999-2003; (2) whether respondent improperly

denied petitioner a face-to-face hearing under section 6330; and

(3) whether respondent abused his discretion in upholding the

proposed levy action.

FINDINGS OF FACT

Some of the facts have been stipulated, and the stipulation

of facts is incorporated herein by this reference. Petitioner

resided in New York when he petitioned this Court.

Petitioner failed to file Federal income tax returns for

1999-2003. Respondent prepared substitutes for returns for

petitioner under section 6020(b), and on August 19, 2005,

respondent mailed to petitioner by certified mail five notices of

deficiency, one for each of the years 1999-2003. Each notice was

addressed to petitioner at P.O. Box 76, Hurleyville, New York,

12747, his last known address. Petitioner did not claim the

certified mail, and the U.S. Postal Service (USPS) returned the

notices of deficiency to respondent as unclaimed. Petitioner did

not petition this Court with respect to the notices of

deficiency.

Following the expiration of the period for petitioning this

Court set forth in the notices of deficiency, respondent timely

assessed the income tax deficiencies and additions to tax plus

statutory interest (collectively the 1999-2003 tax liabilities).
 - 3 -

On March 14, 2007, respondent issued a notice pursuant to

section 6330(a) with respect to the 1999-2003 tax liabilities

informing petitioner of respondent’s intent to levy and of his

right to a hearing (section 6330 hearing). In response,

petitioner timely submitted a Form 12153, Request for a

Collection Due Process or Equivalent Hearing. Petitioner

indicated that he disagreed with the proposed levy and requested

an audiotaped face-to-face section 6330 hearing. Petitioner

stated in pertinent part:

A couple of the issues we will address are whether or
not the IRS followed proper procedure and to ensure
that this “liability” is authentic or even owed. If
this is indeed a proper assessment, I would like to
discuss what collection alternatives are available to
me such as, but not limited to, and any other payment
options that may be available to me. If the IRS has
considered any of prior issues that I’ve raised in the
past to be frivolous, I hereby renounce them.

By letter dated October 23, 2007, respondent’s Appeals Office

acknowledged receipt of petitioner’s Form 12153 and assigned

petitioner’s case to Settlement Officer Edward Repko (Officer

Repko). Respondent’s Appeals Office informed petitioner that it

would not provide a face-to-face section 6330 hearing if he

raised only frivolous arguments.2 The letter also informed

2
Petitioner’s position as expressed in Form 12153 is very
similar in phrasing and tone to the positions of other taxpayers
whose cases we have decided. In those cases, both the Appeals
Office and this Court characterized the taxpayers’ positions as
frivolous, groundless, and/or asserted for purposes of delay.
See, e.g., Reynolds v. Commissioner, T.C. Memo. 2009-181; Cyman
(continued...)
 - 4 -

petitioner that he raised only frivolous arguments in his hearing

request but that the Appeals Office would grant him a face-to-

face hearing if he submitted a letter to Officer Repko raising

legitimate issues.

In response, on November 7, 2007, petitioner mailed a letter

to Officer Repko that disagreed with the determination that he

had raised only frivolous arguments and that also requested a

face-to-face section 6330 hearing at the closest Appeals Office

to his residence. In the letter, petitioner requested

documentation supporting respondent’s assessment, specifically “a

copy of the original documents that were used to enter those

numbers into your computer, not the printout that you would get

from your own computer.” Petitioner contended that he had earned

no taxable income during the relevant years and wrote:

If I do not feel that I had any taxable income for
those years, why would the IRS want me to file? I have
also been informed that if I file showing that I had
zero income; I would be penalized $500.00. Isn’t that
Double Jeopardy?

Petitioner also requested that Officer Repko verify that

respondent complied with applicable law and procedure.

Respondent transferred petitioner’s case to the Albany

Appeals Office, where it was assigned to Settlement Officer

Thomas A. Conley (Officer Conley). By letter dated December 6,

2
(...continued)
v. Commissioner, T.C. Memo. 2009-144.
 - 5 -

2007, Officer Conley advised petitioner that he did not qualify

for a face-to-face section 6330 hearing because he had raised

only frivolous arguments. In the letter Officer Conley scheduled

a telephone conference call for January 9, 2008, and requested

that petitioner submit the following: (1) A completed Form 433-

A, Collection Information Statement for Wage Earners and Self-

Employed Individuals; and (2) Forms 1040, U.S. Individual Income

Tax Return, for 2005 and 2006. By letter dated January 5, 2008,

petitioner continued to assert similar arguments, declined to

participate in the January 9 telephone hearing, and reiterated

his request for a face-to-face hearing.

By letter dated January 10, 2008, Officer Conley rescheduled

the telephone hearing for January 24, 2008,3 and again requested

that petitioner submit a completed Form 433-A and Forms 1040 for

2005 and 2006. In the letter Officer Conley informed petitioner

that the January 24 telephone conference was his final

opportunity to discuss why he disagreed with the levy or to

discuss collection alternatives. By letter dated January 22,

2008, petitioner again declined to participate in a telephone

hearing and reiterated his request for a face-to-face

hearing. Petitioner did not submit a completed Form 433-A or the

2005 and 2006 Forms 1040.

3
The letter rescheduling the telephone hearing contained a
typographical error in that it showed the rescheduled date for
the hearing as Jan. 24, 2007.
 - 6 -

On January 31, 2008, respondent issued a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 sustaining the proposed levy action. In the notice

of determination, the Appeals Office determined the following:

(1) All legal and administrative requirements had been met, (2)

petitioner failed to raise any nonfrivolous issue or offer a

reasonable collection alternative, and (3) the levy properly

balanced the need for efficient collection of taxes with a

taxpayer’s concerns regarding the intrusiveness of the proposed

levy action. The Appeals Office refused to consider petitioner’s

underlying tax liabilities, stating: “Statutory notices of

deficiency were issued to you when the liability was proposed by

the Examination division. You do not have another opportunity to

challenge the liability in the CDP forum.” Petitioner timely

filed a petition contesting respondent’s notice of determination.

OPINION

I. Determination To Proceed With Collection

Section 6330(a) provides that no levy may be made on any

property or right to property of any person unless the Secretary4

has notified such person in writing of their right to a hearing

4
The term “Secretary” means “the Secretary of the Treasury
or his delegate”, sec. 7701(a)(11)(B), and the term “or his
delegate” means “any officer, employee, or agency of the Treasury
Department duly authorized by the Secretary of the Treasury
directly, or indirectly by one or more redelegations of
authority, to perform the function mentioned or described in the
context”, sec. 7701(a)(12)(A)(i).
 - 7 -

before the levy is made. If a taxpayer requests a hearing, a

hearing shall be held before an impartial officer or employee of

the Internal Revenue Service Office of Appeals. Sec. 6330(b)(1),

(3). At the hearing, the taxpayer may raise any relevant issue,

including appropriate spousal defenses, challenges to the

appropriateness of the collection action, and collection

alternatives. Sec. 6330(c)(2)(A). A taxpayer is precluded from

contesting the existence or amount of the underlying tax

liability unless the taxpayer did not receive a notice of

deficiency for the liability in question or did not otherwise

have an earlier opportunity to dispute the liability. Sec.

6330(c)(2)(B); see also Sego v. Commissioner, 114 T.C. 604, 609

(2000). The phrase “underlying tax liability” includes the tax

deficiency, additions to tax, and statutory interest. Katz v.

Commissioner, 115 T.C. 329, 339 (2000).

Following a hearing, the Appeals Office must determine

whether the proposed levy action may proceed. In so doing, the

Appeals Office must take into consideration: (1) Verification

presented by the Secretary that the requirements of applicable

law and administrative procedure have been met, (2) relevant

issues raised by the taxpayer, and (3) whether the proposed levy

appropriately balances the need for efficient collection of taxes

with a taxpayer’s concerns regarding the intrusiveness of the

proposed levy action. Sec. 6330(c)(3).
 - 8 -

Section 6330(d)(1) grants this Court jurisdiction to review

the Appeals Office’s determination made pursuant to the section

6330 hearing. Where the underlying liability is properly at

issue, we review that determination de novo. Sego v.

Commissioner, supra at 610. We review any other administrative

determination regarding the proposed levy for abuse of

discretion. Id. An abuse of discretion occurs if the Appeals

Office exercises its discretion “arbitrarily, capriciously, or

without sound basis in fact or law.” Woodral v. Commissioner,

112 T.C. 19, 23 (1999).

II. Notices of Deficiency

Section 6330(c)(2)(B) precludes a taxpayer from challenging

the existence or amount of the underlying liability unless the

taxpayer did not receive a notice of deficiency for that

liability or did not otherwise have an earlier opportunity to

dispute the liability. Petitioner contends that respondent has

not introduced sufficient evidence that (1) respondent properly

mailed the notices of deficiency for 1999-2003 and (2) petitioner

actually received the notices. Therefore, petitioner contends

that respondent improperly denied him a face-to-face section 6330

hearing on his underlying tax liabilities.5 Respondent contends

5
Petitioner also contends that this Court cannot consider
respondent’s evidence regarding proper mailing because we are
limited to a review of the administrative record. We disagree.
Even in a circuit where the Court of Appeals has held that
(continued...)
 - 9 -

that he properly mailed notices of deficiency to petitioner at

his last known address and that he is deemed to have received the

notices; therefore, he was precluded from challenging his

underlying liabilities during the section 6330 hearing.

The Commissioner is expressly authorized to send a notice of

deficiency by certified or registered mail to the taxpayer’s last

known address. Sec. 6212. Although section 6330(c)(2)(B)

contemplates actual receipt of a notice of deficiency by the

taxpayer, see, e.g., Tatum v. Commissioner, T.C. Memo. 2003-115,

the taxpayer may not avoid actual receipt by deliberately

refusing delivery, Sego v. Commissioner, supra at 610-611. A

taxpayer who refuses delivery of a notice of deficiency is deemed

to have received the notice. Id. at 611; see also Cyman v.

Commissioner, T.C. Memo. 2009-144.

If the taxpayer contests receipt of the notice of

deficiency, the Commissioner must introduce evidence of actual

mailing. See Smith v. Commissioner, T.C. Memo. 2008-229. The

5
(...continued)
administrative review of an IRS determination under sec. 6330 is
subject to the Administrative Procedure Act and that we must
focus on the administrative record, that record may be
supplemented if the record does not adequately disclose the basis
for the IRS’ determination. See Robinette v. Commissioner, 439
F.3d 455, 461-462 (8th Cir. 2006), revg. 123 T.C. 85 (2004). In
this case, respondent offered evidence of timely mailing and
attempted delivery to refute petitioner’s argument that he did
not receive valid notices of determination and to explain the
basis of the IRS’ determination that petitioner could not
challenge the underlying tax liabilities.
 - 10 -

U.S. Court of Appeals for the Second Circuit, to which an appeal

in this case would lie absent a stipulation to the contrary, see

sec. 7482(b)(1)(A), has held that the Commissioner is entitled to

a presumption of actual mailing if the Commissioner introduces

evidence that the notice of deficiency existed and produces “a

properly completed Postal Form 3877 * * * (or [its] equivalent)”,

O’Rourke v. United States, 587 F.3d 537, 540 (2d Cir. 2009). In

O’Rourke the Commissioner introduced a torn, partial copy of Form

3877 as evidence of mailing. The Court of Appeals for the Second

Circuit noted that the mail log “‘(a) bears the signature of the

individual who issued the Deficiency Notice; (b) sets forth the

same certified mail number as is imprinted on the Deficiency

Notice; (c) sets forth the correct address of the Debtors’” and

was stamped by USPS on the alleged date of mailing. Id. (quoting

In re O’Rourke, 346 Bankr. 643, 646 (Bankr. W.D.N.Y. 2006)).6 If

6
The opinion of the Court of Appeals for the Second Circuit
in O’Rourke v. United States, 587 F.3d 537 (2d Cir. 2009), is
consistent with opinions of other courts finding that the
Commissioner is not required to produce a USPS Form 3877 if the
Commissioner introduces equivalent evidence of proper mailing.
See, e.g., Mason v. Commissioner, 132 T.C. 301, 318 n.10 (2009)
(“While respondent did not present a U.S. Postal Service Form
3877, there is sufficient evidence in the record that respondent
sent a Letter 1153 by certified mail to petitioner’s last known
address.”); Walthers v. Commissioner, T.C. Memo. 2009-139
(holding that the Commissioner is not required to produce a Form
3877, but the Commissioner must introduce evidence that “he
mailed the notice to petitioner’s last known address by certified
mail.”); Welch v. United States, 98 Fed. Cl. 655 (2011) (stating
that if the IRS is unable to produce a Form 3877, “it can raise
the same presumption by establishing that it followed a set
(continued...)
 - 11 -

the Commissioner introduces sufficient evidence of mailing, the

taxpayer bears the burden of going forward. Id.

The record contains copies of five notices of deficiency,

each dated August 19, 2005, for 1999-2003. Each notice of

deficiency bears petitioner’s name and post office box address.7

Each notice of deficiency bears a certified mail tracking number.

The record also contains copies of the envelopes in which

respondent separately mailed the notices of deficiency. Each

envelope bears a postmark indicating that the envelope was mailed

via certified mail on August 19, 2005, and a sticker indicating

that USPS returned the envelopes to the sender as “unclaimed”

mail.

At trial LaTrayer Sumter-Moreau (Ms. Sumter-Moreau), a

delivery retail analyst for USPS, testified about procedures

employed when a USPS office receives a piece of certified mail

addressed to a post office box. When USPS accepts a piece of

certified mail from the sender, a postal service employee labels

the envelope with a certified mail tracking number and the date

of receipt. When the envelope reaches the recipient’s post

6
(...continued)
procedure with respect to the taxpayers and providing
corroborating documentation.”).
7
Petitioner does not dispute that the post office box
address was his last known address. Furthermore, petitioner used
the same address on his correspondence with the Appeals Office,
on the petition he filed with this Court, and in his sworn
testimony at trial.
 - 12 -

office, a postal service employee completes a USPS Form 3849,

Delivery Notice/Reminder/Receipt, and places the form in the

recipient’s post office box. The USPS Form 3849 notifies the

recipient that he needs to claim a piece of certified mail. If

the recipient does not claim the item within 5 days, a postal

service employee completes another USPS Form 3849 and places the

form in the recipient’s post office box. If the recipient fails

to claim the item after another 10 days have passed, a postal

service employee will stamp the envelope “Returned to sender” and

return the item to the sender. If the intended recipient’s post

office box is full, a postal service employee will remove all of

the recipient’s mail, including the USPS Form 3849, and place a

notice in the post office box informing the recipient that he has

overflow mail.

Ms. Sumter-Moreau also identified and explained the various

postal stamps and marks on the envelopes in the record. After

examining the photocopied envelopes, Ms. Sumter-Moreau testified

that the envelopes bore a return address for the Internal Revenue

Service office in Philadelphia, Pennsylvania. She testified that

the postmark on the envelope bore the date the item came through

the USPS processing and distribution facility, August 19, 2005,

and that the postmark indicated that the item was sent from

Philadelphia, Pennsylvania. She identified the certified mail

tracking labels on the envelopes and the “Returned to sender”
 - 13 -

stamp. Finally, Ms. Sumter-Moreau identified a stamp on the

envelope indicating the first date USPS notified the recipient

about the certified mail item, the date of the second notice, and

the date USPS returned the item to the sender.

Respondent introduced evidence that the notices of

deficiency existed and evidence of actual mailing equivalent to a

USPS Form 3877. The record contains no credible evidence to

rebut the presumption of actual mailing arising therefrom.

Petitioner did not testify as to whether he received or recalled

receiving the notices of deficiency, but merely asserted that

respondent failed to introduce proof of proper mailing and

receipt. Petitioner advanced no argument and presented no

credible evidence challenging the presumption of actual mailing

and delivery. Petitioner also did not explain why he failed to

pick up the notices of deficiency after appropriate notification

of the delivery of the notices was placed in his post office box.

We find on this record that petitioner failed to accept

and/or refused delivery of the notices of deficiency for the

years at issue and therefore is deemed to have received them.

Accordingly, respondent’s Appeals Office correctly determined

that petitioner was precluded from challenging the underlying tax

liabilities at the section 6330 hearing. See Sego v.

Commissioner, 114 T.C. at 611; Clark v. Commissioner, T.C. Memo.

2008-155.
 - 14 -

III. Demand for Face-to-Face Section 6330 Hearing

Petitioner also contends that respondent improperly denied

him a face-to-face section 6330 hearing. We have held repeatedly

that because a section 6330 hearing is an informal proceeding

rather than a formal adjudication, a face-to-face hearing is not

mandatory. See Katz v. Commissioner, 115 T.C. at 337; Davis v.

Commissioner, 115 T.C. 35, 41 (2000); Bean v. Commissioner, T.C.

Memo. 2006-88. Accordingly, a proper section 6330 hearing may

take the form of a face-to-face meeting, a telephone conference,

or one or more written communications between the taxpayer and

the Appeals Office. Katz v. Commissioner, supra at 337-338; sec.

301.6330-1(d)(2), Q&A-D6, Proced. & Admin. Regs. Once a taxpayer

is given a reasonable opportunity for a hearing and fails to

avail himself of that opportunity, this Court may sustain the

Commissioner’s determination to proceed with collection on the

basis of an Appeals officer’s review of the case file. See,

e.g., Bean v. Commissioner, supra; Ho v. Commissioner, T.C. Memo.

2006-41; Leineweber v. Commissioner, T.C. Memo. 2004-17.

The applicable regulations provide that the Appeals Office

will not grant a request for a face-to-face section 6330 hearing

concerning a taxpayer’s underlying liability if “the taxpayer

wishes only to raise irrelevant or frivolous issues” concerning

the liability. Sec. 301.6330-1(d)(2), Q&A-D8, Proced. & Admin.

Regs. If the taxpayer requests a face-to-face hearing concerning
 - 15 -

a collection alternative, the Appeals Office will not grant the

request “unless other taxpayers would be eligible for the

alternative in similar circumstances.” Id. To be eligible for a

collection alternative, the taxpayer must provide required

returns or make required deposits of tax. Id.

Petitioner requested a face-to-face section 6330 hearing

allegedly to address the underlying liabilities as well as any

available collection alternatives. The Appeals Office properly

denied petitioner’s request. The Appeals Office advised

petitioner on several occasions that it would grant his request

for a face-to-face hearing if he identified relevant issues he

wanted to discuss. Instead of identifying relevant issues,

petitioner repeatedly responded with the same vague contentions

similar to those we have rejected in the past as frivolous and

groundless or offered for purposes of delay. See, e.g., Reynolds

v. Commissioner, T.C. Memo. 2009-181; Cyman v. Commissioner, T.C.

Memo. 2009-144. Furthermore, petitioner was not entitled to a

face-to-face hearing on the underlying liabilities because he is

deemed to have received the relevant notices of deficiency.

Petitioner also asserted that he wanted to discuss

collection alternatives. However, he failed to provide any

financial information to the Appeals Office, including the

requested Forms 1040 and Forms 433-A, which were necessary to

evaluate petitioner’s ability to pay the liabilities and he did
 - 16 -

not propose any collection alternative. We conclude on these

facts that petitioner was not entitled to a face-to-face hearing

on the availability of collection alternatives. See, e.g.,

Williams v. Commissioner, T.C. Memo. 2008-173.

The Appeals Office offered petitioner the right to conduct

his section 6330 hearing by telephone or through written

correspondence. Petitioner refused to participate in the two

scheduled telephone conferences. Petitioner was given an

opportunity for a section 6330 hearing and failed to take

advantage of it. The Appeals Office did not abuse its discretion

in denying petitioner a face-to-face hearing under these

circumstances.

IV. Review of the Notice of Determination

Because the validity of the underlying liabilities is not

properly at issue, we review the notice of determination for

abuse of discretion. See Sego v. Commissioner, supra at 610;

Goza v. Commissioner, 114 T.C. 176, 182 (2000). Ordinarily, we

consider only those matters raised during the section 6330

hearing or considered in the notice of determination. Magana v.

Commissioner, 118 T.C. 488, 493-494 (2002). The Appeals Office

abuses its discretion if it acts “arbitrarily, capriciously, or

without sound basis in fact.” Mailman v. Commissioner, 91 T.C.

1079, 1084 (1988).
 - 17 -

Petitioner has not advanced any argument or introduced any

evidence that would allow us to conclude that the determination

to sustain the levy was arbitrary, capricious, or without sound

basis in fact. Petitioner did not submit a Form 433-A or any

other financial information during the section 6330 hearing, nor

did he offer a reasonable collection alternative. The Appeals

Office determined that the requirements of applicable law and

administrative procedure were met and concluded that the proposed

levy appropriately balanced the need for efficient collection of

taxes with petitioner’s concerns regarding the intrusiveness of

the levy action. Accordingly, we hold that the Appeals Office

did not abuse its discretion in upholding the proposed levy

action.

We have considered the parties’ remaining arguments, and to

the extent not discussed above, conclude those arguments are

irrelevant, moot, or without merit.

To reflect the foregoing,

Decision will be entered

for respondent.